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The seasonally adjusted Kagiso purchasing managers’ index (PMI) increased marginally to 47.9 index points in March, compared with 47.6 points in February, mainly owing to a 3.9 point rise in the employment index.
The slight improvement in the headline PMI brought the average for the first quarter of 2015 to 49.9 index points – just below the neutral 50-point mark and 1.3 points lower than the average for the fourth quarter of 2014.
Kagiso Asset Management head of research Abdul Davids stated that this suggested that the rebound in actual production growth in the fourth quarter was unlikely to be repeated in the first quarter.
“Electricity load-shedding and general weak demand seems to have nipped the recovery in the bud and will continue to weigh on the (manufacturing) sector going forward,” he added.
Meanwhile, despite the month-on-month improvement in the employment index, from 43 to 46.9 points, it remained well below the 50-point mark. The 44.6-point average for the first quarter of 2015, compared with the 46.9-point average in the fourth quarter of 2014, confirmed that employment conditions remained subdued, said Kagiso.
Further, the two largest subcomponents of the PMI, the new sales orders and business activity indices, edged lower to 49 and 44.6 points respectively in March.
After signalling a slowdown in cost price pressures for five months in a row, the price index reflected a renewed rise in the rate of input cost increases. However, the first quarter average came in at just 63.4 index points – below the 69-point average recorded in the fourth quarter of 2014.
Davids noted that the price index was likely to move upwards in the months ahead owing to petrol and diesel price increases.
Despite overall difficult conditions in the sector and a decline in the index measuring expected business conditions in six months’ time to 60.8 points, from 64.4 in February, purchasing managers still remained relatively optimistic about the future. This was also reflected in the PMI leading indicator, which nudged up slightly, stated Kagiso.